FAO: Global food prices rise in February
The Food and Agriculture Organization (FAO) of the United Nations has reported a rise in global food commodity prices in February. The FAO Food Price Index, which monitors the monthly changes in international prices of key food commodities, averaged 127.1 points in February, reflecting a 1.6% increase from January and an 8.2% rise compared to February 2024.
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The surge was largely driven by the sugar price index, which rose by 6.6% from January after three consecutive months of decline, reaching 118.5 points in February. The increase was fueled by concerns over likely tighter global supplies for the 2024/25 season, particularly due to declining production prospects in India and adverse weather conditions affecting crops in Brazil.
The dairy price index increased by 4.0% from January, averaging 148.7 points. The rise was the result of higher prices across all major dairy products, including cheese and whole milk powder, as strong import demand exceeded production in key exporting regions.
The vegetable oil price index averaged 156.0 points in February, up 2.0% from January and as much as 29.1 percent higher than a year earlier. The increase was largely the result of higher prices for palm, soy, and sunflower oils, driven by seasonal supply constraints in Southeast Asia and robust demand from the biodiesel sector.
The cereal price index edged up 0.7%in February, averaging 112.6 points. Wheat prices increased due to tighter supplies in the Russian Federation and concerns over crop conditions in Eastern Europe and North America, though the overall index remained slightly below its February 2024 level. World maize prices continued to rise, underpinned by tightening supplies in Brazil and strong US export demand. By contrast, world rice prices fell by 6.8% in February due to ample exportable supplies and weak import demand.
The meat price index held steady in February, averaging 118.0 points, down marginally by 0.1 percent from January. While international poultry and pig meat prices eased due to abundant supplies, ovine and bovine meat prices remained firm, supported by strong global import demand.
2025 Global wheat production set for modest rise
FAO has also released its latest Cereal Supply and Demand Brief, forecasting global wheat production in 2025 at 796 million tonnes, marking a modest increase of nearly 1% from the previous year. This forecast is underpinned by anticipated production gains in the European Union, particularly in France and Germany, where soft wheat sowings are expected to increase.
However, challenges such as dry conditions in Eastern Europe and excessive rainfall in Western regions could affect yield improvements. In the United States of America, wheat acreage is expected to expand, although yields may decline slightly due to drought conditions impacting winter crops.
Rice production is forecast to hit a record high of 543 million tonnes (in milled equivalent) in 2024/25, driven by positive crop prospects in India and favourable growing conditions in Cambodia and Myanmar.
FAO has raised its estimate for global cereal production in 2024 to 2,842 million tonnes, a slight uptick from the 2023 level.
Global cereal utilisation for the 2024/25 marketing year is forecast at 2,867 million tonnes, a 1.0% increase from the previous year, driven by an expected record rice consumption. Wheat utilization is anticipated to remain stable, as a slight decrease in food consumption is balanced by an increase in industrial use, particularly in China.
FAO predicts a 1.9-percent decline in global cereal stocks, with ending stocks for 2025 forecast at 869.3 million tonnes, with higher stocks in the Russian Federation and Ukraine expected to be offset by reductions elsewhere.
The global stocks-to-use ratio is expected to fall to 29.9 percent, still indicating a comfortable supply. Additionally, FAO has revised its forecast for global cereal trade to 484.2 million tonnes, down 5.6% from the previous season due to changing export dynamics.
2025 Crop outlook varies across regions
FAO has also released a new edition of its Crop Prospects and Food Situation report. Looking ahead to 2025, in Africa, prolonged dry weather conditions in North Africa are dampening cereal production prospects, while favourable rainfall in Southern Africa is expected to support a rebound in crop yields following significant declines in 2024.
In Asia, the outlook is mixed. Far East Asia is expected to see continued growth in wheat production for 2025, driven by large plantings and favourable weather conditions. By contrast, Near East Asia is grappling with low rainfall since late 2024, which has affected yield potentials and could lead to wheat harvests falling below the five-year averages.
Meanwhile, in Latin America and the Caribbean, mixed weather conditions are impacting maize production in South America, with the risk of stunt disease outbreaks posing an additional threat in Argentina. Despite these challenges, aggregate production is still anticipated to remain above average levels, largely due to good output prospects in Brazil.
In Central America and the Caribbean, ongoing dry conditions have reduced cereal plantings in Mexico, while favourable weather in other parts is expected to boost yields.
The Agricultural Market Information System (AMIS), hosted by FAO, also released its monthly Market Monitor report. Along with the usual market analysis sections, the report features an article presenting the first global wheat production forecasts for 2025.
